Return on average assets, excluding one-time merger related expenses, was 1.40%, compared to 1.18% for the same period last year

Return on average equity, excluding one-time merger related expenses, was 11.34%, compared to 9.75% for the same period last year

Tangible book value per share increased 6.9% to $14.96

“For the fourth consecutive year, F&M has achieved record results including record assets and earnings, and we ended 2018 with strong operational and financial momentum,” stated Lars B. Eller, President and Chief Executive Officer. “This is an exciting time at the company as we focus on integrating the Limberlost Bancshares acquisition, continuing our geographic expansion, and investing in new ways to engage with and provide value for our customers. During the fourth quarter, we incurred one-time merger related expenses of $742,000, or $0.07 per basic and diluted share. Backing out these one-time expenses, earnings per basic and diluted share increased 10.8% during the fourth quarter and 21.7% for 2018. We are successfully integrating the Limberlost acquisition and I am pleased to report our system conversion was completed in January 2019 with no material business or customer disruptions. With the contribution of Limberlost, F&M now has total assets of approximately $1.5 billion, loans of approximately $1.1 billion, and deposits of approximately $1.1 billion. The combination of Limberlost and F&M creates a compelling opportunity for future growth, and we are excited by the opportunities we have in 2019 and beyond.”

Income StatementNet income for the 2018 fourth quarter ended December 31, 2018, was $3,193,000, or $0.34 per basic and diluted share, compared to $3,436,000, or $0.37 per basic and diluted share for the same period last year. The 2018 fourth quarter included $742,000 of one-time expenses related to the Limberlost acquisition that was announced on August 20, 2018 and closed on January 1, 2019.

Net income for 2018 was $14,949,000, or $1.61 per basic and diluted share compared to $12,720,000, or $1.38 per basic and diluted share for the twelve months ended December 31, 2017. The 17.5% improvement in net income for 2018 was primarily due to a 10.1% increase in net interest income after provision for loan losses and the benefits of the Tax Cut and Jobs Act, partially offset by a 12.1% increase in noninterest expense. The increase in noninterest expenses was primarily due to $742,000 of one-time expenses related to the Limberlost acquisition.

Loan Portfolio and Asset QualityTotal loans at December 31, 2018, increased by $23,350,000 to $846,374,000, compared to $823,024,000 at December 31, 2017. The year-over-year improvement resulted primarily from a 2.3% increase in commercial real estate loans, a 14.1% increase in agricultural loans, an 11.1% increase in consumer loans, and a 7.1% increase in agricultural real estate.

The company’s provision for loan losses for the 2018 fourth quarter was $105,000, compared to $25,000 for the 2017 fourth quarter. The provision for loan losses for 2018 was $324,000, compared to $222,000 in 2017.

F&M’s loan quality remains strong as the allowance for loan losses to nonperforming loans was 1,249.6% at December 31, 2018, compared to 684.8% at December 31, 2017. Net charge-offs for the year ended December 31, 2018 were $417,000, or 0.05% of average loans, compared to $138,000 or 0.02% of average loans, at December 31, 2017.

Stockholders’ Equity and DividendsTangible stockholders’ equity increased to $138,885,000 as of December 31, 2018, compared to $129,667,000 at December 31, 2017. On a per share basis, tangible stockholders’ equity at December 31, 2018 was $14.96 compared to $13.99 at December 31, 2017. The increase in tangible stockholders’ equity is the result of growth in retained earnings due to increased profitability. At December 31, 2018, the company had a Tier 1 leverage ratio of 12.81%, compared to 12.02% at December 31, 2017.

For 2018, the company declared cash dividends of $0.56 per share, which is a 12.0% increase over 2017’s declared dividend. For 2018, the dividend payout ratio was 34.40% compared to 36.02% for the same period last year.

Mr. Eller continued, “F&M’s success is a direct result of the value we provide customers throughout Northwest Ohio, Northeast Indiana, and Southern Michigan. These markets support compelling growth opportunities for F&M as a result of stable economic trends and our strengthening market position. During 2019, we plan on opening a new office in southwest Fort Wayne and we have recently relocated our Decatur office to a new freestanding location. While we are focused on growth and expansion, we continue to proactively manage risk and ended 2018 with excellent asset quality. Nonperforming loans declined to 0.06% of total loans, compared to 0.12% last year.”

“I appreciate Paul Siebenmorgen’s support through the leadership transition and on behalf of everyone at F&M, I want to thank him for his 14 plus years of experience, dedication and service to F&M. Since I joined the company in September 2018, I have had the privilege to engage with many of F&M’s customers, employees, and shareholders. I am confident in the direction we are headed and believe 2019 will be a strong year for the bank,” concluded Mr. Eller.

About Farmers & Merchants Bancorp, Inc.:Farmers & Merchants Bancorp, Inc. (“F&M”) (NASDAQ: FMAO), is the holding company for the Farmers & Merchants State Bank, a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services through its 30 offices. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay and Steuben counties.

Safe harbor statementFarmers & Merchants Bancorp, Inc. ("F&M") wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management's expectations and comments, may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M's SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC's website, www.sec.gov.

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